VICTORIA — The B.C. Lottery Corporation is asking former CEO Michael Graydon to repay more than $55,000 in salary after a government audit found he broke ethical guidelines.
The Crown gambling corporation wants Graydon to return the money by Tuesday, according to a letter sent by its lawyer to Graydon dated July 11 and released to The Vancouver Sun on Wednesday.
The audit found Graydon was in a conflict of interest when he began negotiating for a new job with Paragon Gaming Inc., in December 2013. As B.C.’s top gaming official, he oversaw decisions related to Paragon.
Graydon failed to tell the lottery corporation about the job talks until Jan. 29, violating ethical standards that stipulate immediate disclosure, according to the audit.
Graydon left to become president of PV Hospitality — a joint venture between Paragon and 360 VOX Corporation — which has proposed a $535-million casino and resort beside BC Place in Vancouver.
Lottery board chairman Bud Smith has said directors were unaware of Graydon’s negotiations when they voted to give him a payout package upon his departure. That package was worth more than $114,000, according to new figures from the lottery corporation.
“The Board would not have agreed to pay these monies had they received full disclosure,” read the letter from J. Kenneth McEwan, counsel for the lottery corporation. “Given the facts and given your acknowledgment and apology in light of the findings of the Ministry of Finance, BCLC requests that you make restitution to it of the salary paid to you for February and March, 2014, together with the salary holdback.
“This will provide redress for monies that were paid to you based on your incomplete ... representations.”
BCLC wants Graydon to repay $48,135.91 in salary from Jan. 29 to March 31, as well as $35,656 in “holdback” salary paid for meeting performance targets. The net total is $55,171.20 after taxes and other deductions.
The lottery corporation won’t ask Graydon to repay $30,960 in vacation money, because he was legally entitled to that amount, said BCLC official Laura Piva-Babcock.
Graydon did not respond to a request for comment Wednesday through Paragon Gaming.
NDP critic Shane Simpson said the lottery corporation board should never have paid Graydon the money in the first place.
“Essentially what they are saying now is you are fired with cause, and you don’t get severance if you are fired with cause,” said Simpson. “It’s probably the correct thing to do.”
As head of a private gaming firm that plans to operate a casino, Graydon will have to do something to repair his relationship with the B.C. Lottery Corporation, said Simpson.
“I don’t see how he has a relationship with them if he doesn’t make good on this,” said Simpson. “He has a significant problem, but it only gets worse if he doesn’t pay.”
As a result of the audit, B.C.’s Gaming Policy and Enforcement Branch is investigating Graydon to see whether he should be registered as a gaming official, and whether he is handling any casino or gaming duties for his new employer.
If he is involved in gaming, and not registered, he and Paragon could be in breach of the Gaming Control Act.
The BCLC letter also asks Graydon to continue to refrain from “engaging in any dealings with BCLC, including any communications or contact with BCLC employees” until the gaming enforcement branch review is complete.
